Vodafone Idea and Bharti Airtel Telecom Majors have announced on Monday. Further, they are going to increase the prices from next month. So, in separate statements, companies stating the profitability of their businesses were assured by the rise in mobile phone calls and data charges beginning December 1.
The hike in tariffs follows record losses by the companies for the quarter ended September 30 due to huge provisions towards clearance of dues owed to the telecom department for adjusted gross revenue (AGR). Also, Analysts say the higher tariffs will augur well for the companies amid high competition in the telecom industry.
Thus, in its statement on Monday, Vodafone Idea – the country’s largest telecom operator by subscriber base – said there is “acute financial stress in the telecom sector” and a high-level Committee of Secretaries headed by the Cabinet Secretary is looking into providing appropriate relief.
The company said it is speedily expanding both its coverage and capacity and is well on track to offer 4G services to 100 crore Indian citizens by March 2020.
“The telecom sector is highly capital intensive with fast-changing technology cycles that require continuing investments. It is, therefore, extremely important that the industry remains viable to support the vision of Digital India,” Bharti Airtel said. Thus, neither of the companies mentioned the quantum of tariff hikes.
Vodafone and Airtel Gets Quarterly Loss
The Supreme Court upheld last month its application by the telecommunications department (DoT) and dismissed the appeals against the government definition of adjusted gross revenue (AGR) for telecommunications corporations. The Top Court allowed the Telecoms Department to recover the telecommunications companies ‘ Rs. 1.33 lakh crore dues.
The government has said it is considering requests for financial relief from mobile carriers. Vodafone Idea and Bharti Airtel and are yet to take a final decision.
Vodafone Idea’s net loss of Rs. 50,921.9 crore for the three-month period marked the biggest quarterly loss in India’s corporate history. The company said provisions for outstanding government dues and penalties due to a one-time charge of Rs. 25,677.9 crore by the telecom department affected its financial performance. Bharti Airtel’s net loss came in at Rs. 23,045 crores after it made a provision of Rs. 28,450 crore following the Supreme Court ruling.